New Employer is Asking me to Incorporate?

[SoCal_PA]

I just graduated and passed the board exam so I'm new to all of this. 

 

One of my jobs will be working in a large ER as an independent contractor (1099) and my employer has asked me start a corporation in my name. I have not heard of independent contractors having to do this before so I am curious as to why and what the pros/cons are. I'm in california if that makes any difference. 

 

Thanks

[rev ronin]

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

[Acebecker]

It makes good sense to at least become an LLC (limited liability company).  What this does in essence is to make your professional person a separate entity from your private person which separates your professional assets from your personal assets.  In the event that something goes wrong and a malpractice suit is filed, the plaintiff can only go after your professional assets and your professional persona - the things limited to the LLC.  If you do not do something like that, then the plaintiff can do after your house, your car, your bank accounts and any that you hold with your significant other, etc. 

[GetMeOuttaThisMess]

An addendum to above, if an award went against you personally that exceeded your level of malpractice coverage then personal bankruptcy may become a realistic option. Depending on your state, not all personal assets are accessible. For example, in Texas your primary residence, one vehicle, and retirement assets are off the table.

[rev ronin]

It also means that you can subcontract your shifts out to someone else if desired, but I THINK it makes it less non-kosher to hire a PA as a 1099.  Consult a tax advisor and employment attorney!  The benefits are likely not to you if your employer is asking for it.

[kargiver]

Keep in mind, you do this, you are responsible for your own insurance, benefits, everything.  Make sure you are compensated appropriately to accommodate this.  Also, your tax structure for payments will be different than as an employee, you'll need to carry a malpractice insurance that has tail coverage for if/when you leave, etc.  There are a lot of benefits to incorporating and doing it this way, but make sure you have a good accountant that understands medicine, what you can deduct, what are legitimate expenses, etc. 

 

Good luck,

G
 

[Latina PA]

New grad here also encountered this same request from a prospective employer.

 

My question:

 

If I do have to incorporate and will be responsible for paying my own taxes, benefits, insurance, etc, etc, then how much more should I be asking in compensation?  Should I ask for 30% more than a regular salaried employee?  

Meaning,  if the job I was going to take as a regular employee was going to pay me $40 per hour then should I be asking $52 per hour as an independent contractor?

[JohnnyM2]

I just graduated and passed the board exam so I'm new to all of this.

 

One of my jobs will be working in a large ER as an independent contractor (1099) and my employer has asked me start a corporation in my name. I have not heard of independent contractors having to do this before so I am curious as to why and what the pros/cons are. I'm in california if that makes any difference.

 

Thanks

See, then they aren't really your employer! The corporation or LLC is your employer. California has very strict laws about what is a "statutory employee" or a "contractor". The state's goal is to make as many people as possible statutory employees. Lots of employers who have treated workers as independent contractors were later ruled against and required to pay back witholding taxes and employment taxes along with interest and penalties because the state ruled the so-called contractors were actually employees. The hospital is wanting to make absolutely sure they can treat you as a contractor. Remember that as a contractor you get NO benefits. No healthcare. No paid vacation. No insurance, etc. You also pay BOTH the employee part and the employer part of your employment taxes. As a rule of thumb, you should get an additional 40% (or more) as an independent contractor compared to what an employee would get paid.

 

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[Latina PA]

So you say as a rule of thumb I should be asking for 40% more than what a salaried employee is making if I decide to be hired as an independent contractor.

 

I live in Florida where there is no State or Local tax, would that 40% rule of thumb figure still apply? 

 

As a new grad I am looking to get into Urgent Care.  I was told by a PA who graduated 2015 and went into Urgent Care that I should take no less than $40 per hour and to decline any lowball offers as they will always try to get you to work for peanuts as a new grad.

 

Now this UC place that I am talking with they want to hire me as an independent contractor and of course offer no benefits at all, so should I start to negotiate at about $56 per hour as an independent contractor ?

[JohnnyM2]

The 40% is a general rule of thumb. You could do your own calculation by looking at the cost of vacation and holiday pay, your LLC's cost of soc.sec. and Medicare taxes, sick leave, malpractice insurance, health care insurance, CME costs, licensing and any other costs normally paid by an employer. You may well find that 40% is not enough. State and local taxes are not generally paid by an employer, but you need to look at Florida's total tax burden, including property taxes, sales taxes and business taxes. I have no idea what that amounts to. My daughter just graduated in Texas and two of her colleagues were offered EM jobs at $65/hr as employees. My daughter is going to do a fellowship, so her pay isn't relevant. Admittedly, I don't know the Florida market but $56/hr seems low for an independent contractor. Maybe someone else can chime in here.

 

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